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Mortgage Fraud Risk on the Rise

Back in the period between 2005 and 2008, instances of mortgage fraud were at a peak. Fortunately, increases in regulation and lending standards led to a strong reversal of this trend, and we have seen very little in the way of fraud in the past few years. However, according to Bret Fortenberry of CoreLogic’s Insights blog, there is reason to believe that mortgage fraud is once again on the rise.

CoreLogic has been tracking mortgage fraud risk since 2010. Risk has moved up and down significantly, dipping into a deep valley early this year, but the overall trend still seems to be moving gradually upward. Low interest rates and rising home prices, which give unscrupulous individuals an opportunity to misrepresent down payments, can be attributed to much of this risk. Moving forward, the group expects these trends to continue, placing us at the bottom of a peak that should reach its highest level at some point in the second quarter. According to projections, this could be the highest level of fraud risk since CoreLogic first started tracking.

Jobs Report Shines, Rates Go Up

Last week ended with the release of the jobs report, which represents the most influential piece of economic data in the world. Though many were expecting a lackluster report, and hoping that it would inspire the Fed to postpone the rate hike they scheduled for December, the report exceeded expectations across the board. Employers added more jobs than they have in any month since December of 2014, with a total of 271,000. The unemployment rate dipped down to 5%. Meanwhile, hourly earnings went up by 0.4.

The main takeaway is that the Fed is now almost certain to raise rates next month. With this revelation, mortgage rates jumped significantly higher today. Most lenders are offering their highest rates since July. This may result in some of the pressure being released, and it is not impossible that we may see this trend reverse throughout the coming days. However, floating remains a risky prospect, outweighing the potential rewards for most people looking to secure a loan in the near future.

November Opens With Increased Volatility

Last week, October ended with one-month highs in mortgage rates. As we go into November, rates are inching up even further. Much of this activity can be attributed to the recent Fed Announcement, which promised to tighten policy. This serves to push up US Treasuries, which influences the mortgage-backed securities that directly influence mortgage rates.

The good news is that, as this represents the market correcting itself in anticipation of the Fed’s policy rate hike, we can likely expect it not to be affected any further by the time the hike goes into effect. In the meantime, though, the market will be under all the more pressure. The more it looks like the planned hike will happen in December, the more we can expect rates to move upward. This week in particular has a high potential for volatility, with the upcoming jobs report on Friday morning marking the time of highest risk. Unless you can afford to take risks, you would be well-advised to lock into current rates by Thursday.

More Cities Achieve Housing Stability

According to Freddie Mac, about half of the country’s large metropolitan areas have returned to a historic stable range. This is according to their Multi-Indicator Market Index, or MiMi. Using proprietary data along with local market data, including home purchase applications, payment-to-income ratios, proportions of on-time mortgage payments, and local employment rates, MiMi rates cities based on their own individual stable ranges.

At present, a full forty-seven of the United States’ one hundred biggest metros fall within the stable range. Cities throughout the west coast have been particularly strong, with Seattle, Portland, and all of California’s big cities ranking as “in range”. Washington State itself is among the most improved states, with an improvement of 10.41%.

The national MiMi value currently stands at 81.2. Such a number is indicative of an overall housing market that is on the outer range of stable. This represents an improvement of 37% over the all-time low experienced in October of 2010. However, it still has a way to go to reach the high of 121.7.

Market Stabilizes at October’s Highest Rates

Friday closed with the highest mortgage rates for the month so far. Fortunately, these rates still represent an improvement over most of September. These rates remained steady through Monday, as is normal for a three-day weekend. What to expect as we move forward, though, remains very much in question.

The stocks and bonds markets are both at a significant crossroads, both with the potential to either move back into the range seen in June and July or continue a long trend of downward-moving yields and stock prices. There may be some risk for rates to quickly move higher, if we can take the Fed at their word and ignore the weak trends in global economic growth. The Fed seems convinced that the economy will allow for a rate hike by the end of 2015, but many critics are saying otherwise.

All things considered, it may be too optimistic to expect rates to dip any lower than they currently are; anyone looking to float should expect to play the long-term game, and be prepared to pay more if you turn out to be wrong.